Zambia achieves high score in EITI implementation

Zambia have fully met the objective that the annual planning for EITI implementation supports implementation of national priorities for the extractive industries while laying out realistic activities that are the outcome of consultations with the broader government, industry, and civil society constituencies. The 2021-2022 workplan is structured using a clear results chain showing how the activities are expected to contribute to identified outcomes and impact. The templates demonstrate clear links between the objectives and national priorities including the Companies Act implementation, the 7th National Development Plan, Zambia’s Economic Recovery Plan (2020-2023) and public interest as indicated through media coverage. The workplan covers the scope of the standard and there is focus on newer requirements of the Standard including beneficial ownership disclosures, gender mainstreaming and environmental disclosures. Operational and strategic objectives related to Validation, systematic disclosures, and the institutionalisation of EITI implementation through the ZEITI Bill are also covered in the workplan. The workplan is costed and identifies funding sources. The level of progress in addressing this requirement has been maintained since the previous Validation.

Zambia have fully met the objective to enable evidence-based public debate on extractive industry governance through active communication of relevant data to key stakeholders in ways that are accessible and reflect stakeholders’ needs. As per the requirement, Zambia have ensured that disclosures are comprehensible by disclosing summaries of findings from audit reports relevant to the sector, as well as MMMD monitoring reports on production and export data. EITI data is actively used to inform Parliamentary debate and decision-making within government as evidenced by ZEITI being asked to provide evidence on licensing, legal reform, and discussions on the mining fiscal regime. Zambia has exceeded the requirements by undertaking more analytical work in the form of financial modelling reports, a quarterly production bulletin and reports that cover ASM and other issues, in addition to responding to regular media and governmental requests for data and analysis. Even though dissemination efforts have been affected by the COVID-19 pandemic, events have been led by civil society members of the ZEC, and ZEITI meetings have been live-streamed through social media channels. However, ZEITI is not exceeding all recommendations of this requirements as it does not yet provide sufficient evidence for catering to differences in age, gender, ethnicity, languages, or others. Written comments by ZEC argued that meetings with local communities are held in local languages and in English, with an explicit focus on gender balance in both engagement and in participation in outreach activities. While recognising these comments, the International Secretariat did not locate explicit documentation or data translated to local languages or specific actions that would cater to marginalised groups in the documentation provided, with the exception of a hashtag referring to gender equality.

Zambia have fully met the objective to enable the broader use and analysis of information on the extractive industries, through the publication of information in open data and interoperable formats. ZEITI has an policy that mandates open format publication and use, and publish EITI data on production, exports, and licences in Excel format on their ZEITI portal. ZEITI has finalised all summary data files for all fiscal years covered by EITI reporting. Data on production and exports is collated through the government system named MOSES and is shared monthly with Zambia EITI, Zamstats and ZRA. However, the government and companies themselves do not publish most information online using open formats. Zamstats publishes monthly data in the form of a pdf bulletin. This covers some export data. Zamstats also has an open data portal although this does not have the latest data. Zamstats and ZEITI have begun applying Harmonised System commodity codes in their regular reporting which ensures much better clarity and comparability in their disclosures.

Zambia have fully met the objective to ensure that EITI implementation is a continuous learning process that contributes to policymaking, based on the ZEC regularly considering findings and recommendations from the EITI process and acting on those recommendations it deems are priorities. The ZEC uses the EITI report to review progress in meeting recommendations from the EITI process. ZEITI also submitted evidence demonstrating that recommendations from EITI implementation are the focus of the current workplan and there is an annual process of reviewing progress in implementation. This implementation status reports highlights if a recommendation is at planning stage, partially implemented or fully implemented. The level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have fully met the objective of ensuring regular public monitoring and evaluation of implementation, including evaluation of whether the EITI is delivering on its objectives, with a view to ensuring the EITI’s own public accountability. The level of progress in addressing this requirement have been maintained since the previous Validation.

There is evidence of high government engagement in EITI implementation in Zambia. Both the Ministry of Mines and Mining Development and the Ministry of Finance actively participate in EITI. The Secretary to the Treasury chairs the ZEC. The Minister of Mines recently launched the 2019 EITI report. The national secretariat has high capacity and commitment. The government partly funds EITI implementation. There was a reduction in funding in 2020, in the wake of the Covid-19 pandemic. The Secretariat’s assessment is that the objective of the government’s engagement in EITI implementation is fully met and the level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have fully met the objective of ensuring that extractive companies are fully, actively and effectively engaged in the EITI, both in terms of disclosures and participation in the work of the multi-stakeholder group, and that the government ensures an enabling environment for this. The representative body of small-scale miners also actively participate in EITI activities. The level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have fully met the objective of ensuring that civil society is fully, actively and effectively engaged in the EITI process, and that there is an enabling environment for this. The active participation of civil society in the EITI process is key to ensuring that the transparency created by the EITI can lead to greater accountability and improved governance of oil, gas, and mineral resources. The provisions related to civil society engagement seek to establish the conditions that permit this to occur over time. Documentation and stakeholder consultations imply there has been a legal dispute between a mining company and a CSO representatives. However, all stakeholders confirmed that the constituencies resolved representation issues and the matter separately without affecting EITI implementation. Obstacles do not influence CSOs’ freedom to express views, operate, and associate on issues related to the EITI. The level of progress in addressing this requirement have been maintained since the previous Validation.

The ZEC have exceeded the objective that there is an independent ZEC that can exercise active and meaningful oversight of all aspects of EITI implementation that balances the three main constituencies’ (government, industry and civil society) interests in a consensual manner. As a precondition for achieving this objective, the ZEC must include adequate representation of key stakeholders appointed on the basis of open, fair and transparent constituency procedures, make decisions in an inclusive manner and report to wider constituencies. The ZEC has technical working groups on gender and legislative advocacy, and has considered gender-balance in the election of new members. Many elections have been postponed due to the COVID-19 pandemic until Spring 2022, but newly elected representatives are conforming with this ambition within each constituency (4 out of 10 new representatives were female from 2020 onwards). ZEITI has been able to extend government participation beyond the ZEC members. Agencies such as PACRA and the OAG are actively engaged in EITI implementation. Government departments share information requested by EITI regularly and make use of EITI disclosures and analysis in their work. ZEITI has emerged as a platform to consult and influence policy discussions from an evidence basis. Government engagement is beyond regular participation in the ZEC and in the reporting process. The government consults ZEITI in various policy processes. This includes on legal reform such as on the ongoing review of the Mines and Minerals Act and the proposed development of the ZEITI Bill. PACRA has consulted with ZEITI on strengthening BO disclosures while the Ministry of Finance and the Ministry of Mines have consulted with ZEITI on the mining fiscal regime including on engagements with the IMF.

Zambia have fully met the objective of ensuring public access to an overview of the extractive sector in the country and its potential, including recent, ongoing, and planned significant exploration activities. The level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have fully met the objective of ensuring a public understanding of the extractive industries contribution to the national economy and the level of natural resource dependency in the economy. The level of progress in addressing this requirement have been maintained since the previous Validation, providing data for the extractive sector’s contribution to GDP, government revenues, and exports. Additionally it provides employment data disaggregated by gender. ZEITI notes that there is no data to estimate informal sector activity, though it is not a significant contributor to macroeconomic indicators.

Zambia have fully met the objective of ensuring public understanding of all aspects of the regulatory framework for the extractive industries, including the legal framework, fiscal regime, roles of government entities and reforms. The level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have fully met the Phase I of this requirement, with the objective to ensure the public accessibility of all licenses and contracts underpinning extractive activities. Additional efforts will be needed for Zambia to fully meet Phase II of the requirement, to be assessed in its next Validation. Licenses awarded in 2021 are not publicly disclosed. In their comments to the draft Validation report, ZEC noted that government entities do not deviate from its (non-disclosure) policies on license and contract disclosures. Additionally, there is currently no legal framework or practice guaranteeing comprehensive disclosure of the contents of future or current licenses. However, Zambia EITI have made a first attempt to provide a partial list of which extractive licenses, concessions and development agreements are publicly available, through third-party sources, but only for a few licenses awarded ahead of the latest legislation. Zambia EITI also publishes the complete list of licenses that exist in Zambia, while noting that no license or contract is currently systematically disclosed apart from through third-party sources. However, Zambia EITI is also currently undertaking a study to further its ambitions for public disclosure of all licenses and contracts awarded or amended in 2021 onwards. ZEC noted that this study, combined with other activities such as adoption of a transparency bill, all represent a cogent plan for overcoming technical and legal challenges to contract disclosure. In its interpretation of what constitutes a “published plan with a clear time frame reflected in work plans addressing any barriers to comprehensive disclosure”, the International Secretariat considers that Phase I of EITI requirements on license and contract disclosure have been fully met. However, there are still concerns related to whether Zambia EITI will be able to fully meet the requirements of Phase II, when legal and practical barriers to contract disclosure must have overcome and that all new extractive contracts and licenses are fully disclosed from 1 January 2022 onwards.

Requirement 6.4 is an encouraged aspect of the EITI Standard and is therefore not assessed in Validation unless there is evidence that the country has exceeded the requirement. Still, Zambia have met the objective of providing a basis for stakeholders to assess the adequacy of the regulatory framework and monitoring efforts to manage the environmental impact of extractive industries, and to assess extractive companies’ adherence to environmental obligations. The report clarifies the role of various government agencies, the nature of an Environmental Protection Fund which provides financial assurances of environmental rehabilitation after mine closure, as well as the lack of public access to Environmental Impact Assessments and similar documentation through centralised government portals.

Zambia have exceeded the objective of this requirement, to provide a public overview of awards and transfers of oil, gas and mining licenses, the statutory procedures for license awards and transfers and whether these procedures are followed in practice. While an audit report of 2017 caused concerns surrounding the award processes of several mining licenses, the report now summarises these findings, as well as the recommendations and follow up from government. The report goes beyond what is required by the EITI Standard in providing an overview of non-trivial deviations from statutory processes.

Zambia have fully met the objective of this requirement to ensure the public accessibility of comprehensive information on property rights related to extractive deposits and projects. While some disclosure gaps were identified through documentation review, the gaps were remedied by the Mining Cadastre Office by the time of drafting this assessment, and the level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have mostly met the objective of this requirement to enable the public to know who ultimately owns and controls the companies operating in the country’s extractive industries, particularly those identified by the ZEC as high-risk, to help deter improper practices in the management of extractive resources. While most aspects of Phase I of beneficial ownership requirements have been addressed, there is no evidence that the ZEC has published an assessment of the comprehensiveness and reliability of beneficial ownership disclosures to date from all companies holding or applying for extractive licenses (i.e. not only of material companies included in the scope of EITI reporting in accordance with EITI Requirement 2.5.c). In its comments to the draft version of this assessment, ZEC indicated that most technical aspects of the requirement are addressed, though also confirmed that some gaps and challenges exist. In addition, the PACRA's company register and portal does not provide the name of the stock exchange where publicly-listed companies (or their wholly-owned subsidiaries) are listed. Lastly, legal ownership of extractive companies is only partially disclosed by Zambia EITI, and while the PACRA registry contains some information on legal owners, for most companies it is not possible to ascertain that all legal owners and their respective shares have been disclosed. BO data is not available through the PACRA register for the material companies.

Zambia have fully met the objective of ensuring an effective mechanism for transparency and accountability for well-governed SOEs and state participation more broadly through a public understanding of whether SOEs’ management is undertaken in accordance with the relevant regulatory framework. This information provides the basis for continuous improvements in the SOE’s contribution to the national economy, whether financially, economically or socially. The level of progress in addressing this requirement have been maintained since the previous Validation.

Requirement 4.2 remains 'Not Applicable' in Zambia in the period under review. The SOE operating in the mining sector, Zambia Consolidated Copper Mines – Investment Holding (ZCCM-IH), or other government agencies do not receive revenues paid in kind or directly from the sale of the state’s share of production.

Zambia have fully met the objective of ensuring the traceability of payments and transfers involving SOEs and strengthen public understanding of whether revenues accruable to the state are effectively transferred to the state and of the level of state financial support for SOEs. The level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have mostly met the objective of ensuring public understanding of extractive commodity(ies) production levels and the valuation of extractive commodity output, as a basis for addressing production-related issues in the extractive industries. Since the previous Validation production values of Amethysts, Dolomites and Quartz have not been provided for 2019. ZEITI has also not performed additional disclosures as in past years to cover additional commodities missing from EITI reports. Comments from ZEC provided reasoning behind why such data is difficult to collect and publish, but did not indicate why Zambia EITI’s former disclosures of production data were not extended to 2019. Lastly, as identified in previous Validations, constraints continue to exist in the MOSES system’s scope. Thus this leads to capacity constraints of the related government agencies (MMMD and ZRA), providing comprehensive and disaggregated production data due to a non-digital monitoring system for industrial and energy minerals, as well as gemstones.

Zambia have mostly met the objective of ensuring the public understands of extractive commodity(ies) export levels and the valuation of extractive commodity exports, as a basis for addressing export-related issues in the extractive industries. Since the previous Validation, Zambia has improved on data access and interoperability by publishing export numbers in open data formats applying international data standards. However, export volumes and values of different gemstones and industrial minerals have not been provided for individual commodities nor has it been for cement or limestone products specifically. Comments from ZEC referred to example data from ZRA, though none of the information appeared to cover the gaps of 2019 export volumes and values for all commodities.

Zambia have fully met the objective of ensuring comprehensive disclosures of company payments and government revenues from oil, gas, and mining as the basis for detailed public understanding of the contribution of the extractive industries to government revenues. The level of progress in addressing this requirement have been maintained since the previous Validation.

Requirement 4.3 remains 'Not Applicable' in Zambia in the period under review. The level of progress in addressing this requirement have been maintained since the previous Validation.

Requirement 4.4 remains 'Not Applicable' in Zambia in the period under review. The level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have mostly met the objective of this requirement to ensure disaggregation in public disclosures of company payments and government revenues from oil, gas and mining that enables the public to assess the extent to which the government can monitor its revenue receipts as defined by its legal and fiscal framework, and that the government receives what it ought to from each individual extractive project. Zambia has adequately identified what constitutes a project in the Zambian context, as well as which revenue streams are levied/imposed on project level. The approach taken to report revenues by Zambia EITI is also fully in line EITI's Requirement 4.7. However, there are weaknesses in companies' actual reporting of revenues by project, where only 70% of companies’ payments that were made by project were reported as such. The companies that failed to provide information with adequate detail include Kalumbila Minerals Limited, ZCCM Investments Holdings Plc, Kagem Mining Ltd, Sino-Metals Leach Zambia Ltd, Larfage Cement Zambia Plc, and CNMC Luanshya Copper Mines Plc. Even so Zambia EITI has greatly increased the coverage of data per project, increasing its coverage from 30% in 2018 to 70% in 2019. However, the barriers for the government to report mineral revenues by project is an issue for the sustainability for the availability of project-level data, and the report falls short of providing concrete recommendations for how to overcome this issue of government systems in the medium- to long-term.

Zambia have fully met the objective of ensuring that public disclosures of company payments and government revenues from oil, gas and mining are sufficiently timely, as defined by the EITI Standard, to be relevant to inform public debate and policy-making. The level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have fully met the objective of ensuring that appropriate measures have been taken to ensure the reliability of disclosures of company payments and government revenues from oil, gas and mining. The aim is for the EITI to contribute to strengthening routine government and company audit and assurance systems and practices and ensure that stakeholders can have confidence in the reliability of the financial data on payments and revenues. The EITI report falls short of providing an explicit/detailed overview of which precise companies or government entities have undergone audits. Still, stakeholder consultations confirmed that the additional assurance procedures are sufficient for stakeholders to maintain confidence in the reliability of the financial data in the EITI Report. Finally, the report improves from previous validations of Zambia by providing an assessment of the reliability of government and company data, and an independent review by the EITI Secretariat of companies’ filings did not reveal any significant deviation by companies from their annual returns obligations to PACRA, even if deviations were publicly accessible and confirmed by the IA.

Zambia have fully met the objective of ensuring the traceability of extractive revenues to the national budget and ensure the same level of transparency and accountability for extractive revenues that are not recorded in the national budget. The level of progress in addressing this requirement have been maintained since the previous Validation.

Progress in addressing Requirement 5.3 is not assessed in Validation unless there is evidence that the country has exceeded the requirement. The level of progress in addressing this requirement have been maintained since the previous Validation.

Zambia have fully met the objective to enable stakeholders to gain an understanding of benefits that accrue to local governments through transparency in companies’ direct payments to subnational entities and to strengthen public oversight of subnational governments’ management of their internally-generated extractive revenues. Direct payments made by companies to subnational government entities are included in the EITI Report, consisting of property rates and annual business fees paid directly to local councils. The level of progress in addressing this requirement have been maintained since the previous Validation.

Requirement 5.2 remains 'Not Applicable' in Zambia in the period under review. No transfers between national and subnational government entities are explicitly related to only revenues generated by the extractive industries and mandated to be distributed using a revenue-sharing formula. The level of progress in addressing this requirement have been maintained since the previous Validation.

Requirement 6.1 remains 'Not applicable' in Zambia in the period under review. Zambia does not have mandatory social expenditures. Voluntary expenditures (Annex 8) have been unliterally disclosed disaggregated by beneficiary, cash/in-kind and the nature of support (with the exception of Lubambe, Maamba, Kansanshi). Mandatory environmental payments that relate to the Environment Production Fund are partially disclosed though we do not find to be payments to government. Payments to the EPF only appear to be held in trust by the Government of Zambia, until mine project closure. If a company adequately rehabilitate their mine areas, a company would be reimbursed their original contribution to the EPF. On this basis, we conclude that payments to the EPF are not environmental payments from companies to governments, as the government only has a contingent claim to the EPF assets. This requirement would therefore only be applicable under Requirement 6.4. Therefore, the level of progress in addressing this requirement have been maintained since the previous Validation.